<p>If you earned a certain income and put some of it into savings in 2009, do colleges actually calculate it twice?</p>
<p>As in, X% for income earned towards your EFC and Y% of savings towards the EFC too?</p>
<p>But aren't they the same money, just moved from the income to the savings? In that case, wouldn't the money have been better spent rather than saved so that the EFC wouldn't be as high?</p>
<p>Just speculating and wondering how this whole process works, thanks.</p>
<p>Technically, yes it works that way but parents do have an asset protection allowance which is age dependent so the increased savings may or may not impact the EFC. Also, it’s only a percentage of assets that increase the EFC - 20% for students and 5% for parents.</p>
<p>As far as spending vs. saving, it does make sense to spend the money on necessary educational expenses before FAFSA is filed since the asset portion is calculated based on the value that day. But it doesn’t make sense not to save and not be able to come up with needed funds when the school starts!</p>
<p>There are worksheets and tables in this EFC Formula Guide that will help clarify the calculations:
<a href=“https://ifap.ed.gov/efcformulaguide/attachments/111609EFCFormulaGuide20102011.pdf[/url]”>https://ifap.ed.gov/efcformulaguide/attachments/111609EFCFormulaGuide20102011.pdf</a></p>
<p>You might also take a look at the book “Paying For College Without Going Broke” at your bookstore or library as it contains alot of useful info and suggestions.</p>
<p>But aren’t they the same money, just moved from the income to the savings?</p>
<p>But that’s true for all savings…all savings pretty much comes from income (from paychecks or investments). The exception would be gift money or inheritance. But, certainly FAFSA isn’t only going to consider savings that come from gifts or inheritance.</p>
<p>But, you make a point that some have complained about. Some have complained that savers get hurt by these calculations, but as mentioned, parents do have “some” asset protection.</p>